posted on January 25th 2018 in Fort Worth CFP Team Posts with 0 Comments /

This is an excerpt from the whitepaper “Exaggerated Returns: How Trading Newsletters & Services Can Make Such Outrageous Claims, and How to Spot Them” by Joshua Wilson, CMT, AIF. Download the full document here.

The investment advisory world struggles with the same issues as the mainstream media. Everybody wants to be assumed to be credible, but the different parties competing for your investment advisory attention are neither held to the same standards, nor pursuing the same goals! Whatever level of respect you have for The Wall Street Journal, you probably trust it more than you do BuzzFeed — as you should. The WSJ, though not without flaws, is primarily written by industry professionals, reporters and journalists. BuzzFeed is written by entertainers and marketing pros. Taking BuzzFeed as seriously as you take the WSJ is much like taking a broker or especially a non-professional “trading service” as seriously as you take a person who has agreed to owe clients a fiduciary duty at all times and on all accounts.

The same goes for hiring a friend as a “trader” to trade an account for you. Investment pros are heavily regulated by the government and trade organizations and must be registered with the SEC or have a federal license. If someone is investing for you for compensation while keeping your investments separate from a registered or licensed firm, they are likely breaking laws that were put in place to protect you. I get it; it’s a lot cheaper to operate without the government on your back. As a partner at WorthPointe, I can tell you firsthand that a huge chunk of the fees clients pay us don’t really go to us — they go to the direct and indirect costs of complying with federal and state regulations. Some rules seem very fair to me, and others seem unnecessarily onerous, but whatever my opinion of them, we comply and said compliance is costly.

Advisors are feeling the burn. A 2016 survey by Natixis Global Asset Management revealed the pressure on them due to increased regulations and unrealistic client expectations is so great that nearly half say they will have to change their business model, and over one-quarter are considering selling their practices, merging with another firm, or exiting the industry. Still, the biggest difficulty advisors say they are faced with is managing around the unrealistic expectations and irrational behaviors of clients. Is this any surprise when legitimate advisors can be confused with and unrealistically compared to “fake news” investment services with low overhead — services that promise consistently outrageous returns with little risk, little time commitment, and the ability to bypass the thousands of hours of training and practice professional advisors have?

about the author: Joshua I. Wilson CMT

Josh-Wilson CMTJoshua I. Wilson, CMT®, AIF® is a partner and wealth manager who has managed over $2B for TD Ameritrade. Joshua led the national training and development program for all of TDA’s new advisors and managers, won a national coaching award. Joshua gave his graduation speech at Brown University. Joshua is a Chartered Market Technician® (CMT®) and a Accredited Investment Fiduciary® (AIF®).

Learn more and/or Contact Joshua

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